Crypto rules are a competitive business in Asia, with places like Hong Kong and Singapore struggling to become Asia’s crypto hub and capture all the business associated with this status.

However, the challenge lies in creating a rulebook that balances investor protection with an inviting to businesses and new capital. And here Hong Kong has an advantage over places like Japan or Korea, as its common law framework for traditional funding has made its finances one of the most open and free in the world-a recent report from a Canadian think tank that became Considered Hong Kong the “freest economy” in the world with Singapore just behind it in second place.

With crypto, however, Hong Kong has moved relatively slowly, especially compared to Singapore. But Duncan Chiu, a member of the Hong Kong’s Law Council and chairman of its Technology and Innovation Committee, which oversees Hong Kong’s technology parks and research facilities, says the original caution of the regulation of crypto regulation.

“Being a late mover is sometimes a good thing because you have a clear picture,” Chiu said in a recent interview with Coindesk. For example, he pointed out how the monetary authority in Singapore (MAS), the city’s most important financial regulator, has moved quickly to adopt crypto rules. MSA originally regulated crypto according to its payment services that treat crypto inaccurately as a payment tool rather than an asset class. Japan did the same early and later forced revisions in 2024, when Defi and tokenization eventually gained traction.

“While Hong Kong started late, the good thing is that there were clearer patterns for how these products were used,” said Chiu, one of the most prominent votes for Krypto in Hong Kong with colleague Lego Member Johnny Ng. CHIU further pointed out how the original Bitcoin -White Book labeled the Active Class as electronic cash, while the reality of the market is that it has become more of a product – a point of view shared by the US goods and futures commission – as another example of how market behavior Around crypto has developed and necessary rules to adapt.

Building regulatory adaptation

One of the most important questions Chiu said he would like to work on in Lego builds a clear classification for different types of digital assets, such as Cryptocurrencies vs. stablecoins, while also working with global regulators to ensure adaptation among them.

“We need clear definitions and segmentation,” Chiu explained. “Some assets must be regulated as securities, while others must remain unregulated, like memcoins.”

According to Chiu, Memecoins should be treated as collectibles, just like Pokémon cards or stamps.

“Memecoins don’t have functionality behind them – they don’t use smart contracts,” Chiu said. “They are just collectibles, so I see no reason to regulate them as financial products.”

A dedicated crypto regulator?

Given where unique crypto is like an asset class, some jurisdictions, such as Dubai and its virtual assets Regulatory Authority (VARA), have created their own separate regulator for virtual assets.

When asked if he felt that Hong Kong should take the same way, Chiu remembered that in his early years in Lego he had originally supported the creation of a digital version of Securities and Futures Commission (SFC), “ESFC. “

However, Hong Kong’s government has instead chosen to keep crypto supervision under existing financial regulators. SFC has a dedicated digital asset team, while Hong Kong Monetary Authority (HKMA) oversees stablecoins. Chiu said he is so far satisfied with this event, especially as SFC is expanding its number of staff, even when the government calls for saving systems elsewhere.

“The government’s intention is to keep everything under SFC. They want a team inside SFC and they hire. We just approved that in Lego, ”CHIU noted.

Legco’s crypto -priorities

Chiu sees the establishment of OTC trade and custody regulations as the next major priorities for Lego, while leaving building rules around cryptoder rivatives and gearing trade for SFC and Crypto Exchanges instead of adopting new laws.

Chiu considers crypto-regulation as a top-five priority, where the others are mostly about Hong Kong’s economic recovery and questions of public security. But he acknowledges that not all of his colleagues Lego Members share the same urgent nature with regard to crypto regulation, with some who want to focus on building stricter investor protection mechanisms first, to avoid another FTX or JPEX, of which both failures left many in Hong Kong – and around Asia – with a big hole in their digital wallets

However, only so much regulatory bandwidth is available. Hong Kong’s job market is weak and the property sector is at the bottom of a painful correction. Hong Kong is also caught between the United States and the mainland China in Donald Trump’s next trade war, making an economic recovery that challenges the territory.

“Some Lego members are big supporters of virtual assets, but not all, of course,” Chiu said. “They all have different priorities.”